On Thursday, the US-Iran conflict reached its 125th day. Qatar reported “positive progress” as the United States and Iran concluded indirect technical discussions in Doha regarding the memorandum of understanding signed on June 17.
Tehran says a “communication channel” will be established with Washington to report and discuss breaches of the MoU.
Today, both parties agreed to continue discussions over the coming period, with the next meeting to be scheduled at the earliest possible time following the funeral processions of the former Iranian Supreme Leader.
Now, the markets shift their focus to Nonfarm payrolls data for June, due later on Thursday, which is also expected to factor into the Fed’s plans for interest rates. Inflation and labor strength are the central bank’s two main considerations in adjusting interest rates.
The payroll data is expected to show some cooling in labor market growth. But nonfarm payrolls have consistently surprised to the upside for the past three months.
Strength in the labor market gives the Fed more headroom to hike rates.
Still, private payroll data on Wednesday read weaker than expected for June, while on Wednesday, Federal Reserve Chair Kevin Warsh signaled that the central bank will firmly follow its 2% inflation target and disappoint anyone who expects loose monetary policy.
He largely declined to comment on the central bank’s plans for interest rates, noting that the outlook for higher inflation had somewhat improved since he took office.
Still, Warsh’s hardline comments pointed to an increasingly hawkish tilt in the Fed, a notion that has weighed heavily on prices in recent months.
His comments spurred some overnight gains in the dollar, keeping it close to recent 13-month highs.
On Wednesday, gold futures rose and tested the significant resistance at $4,124.19, after holding at the immediate support at $4,035.38, and experienced a sell-off exactly the same way as I explained in my previous analysis.
On Thursday, after opening the day at $4,047.47, gold futures tested the day’s high at $4,092.35 and the day’s low at $4,043. They are trading at $4,082, facing significant resistance at the 9 EMA ($4,096), which has already come below the significant resistance at the 200 EMA ($4,316.55), signaling extensive bearish pressure at the current levels.
I anticipate that if gold futures try to test the immediate resistance at $4,124.19, selling could start as the peace deal optimism is still in a “Catch-22” situation, which will keep the selling pressure intact till the final deal is signed between the US and Iran.
Disclaimer: Readers are advised to take any position at their own risk, as this analysis is based solely on observations.
